24 Mar 2011

Fitzdares, a London-based bookmaker located in Mayfair, has launched a new financial spread betting service to its clients through a partnership with WorldSpreads, a UK based spread betting company. The new product is branded as Fitzdares Financial Spreads and is live since last week.

Balthazar Fabricious, CEO of Fitzdares, thinks financial spread betting can complement the company’s bookmaking services and is in line with their values and exclusive style. Commenting on the new partnership, Balthazar Fabricius said: “we are bringing our personalised service from the track to the stock markets, in a one stop betting destination where the members can take advantage of the best odds irrespective of whether it is Cheltenham or the implosion of the euro, all this without having to use a different company or risk an inferior offer.” With this agreement, Fitzdares will be offering all the markets available at WorldSpreads, in addition to its horseracing portfolio.

Fitzdares was founded by Balthazar Fabricius in 2006 and is based in Mayfair. The company targets high rollers and accepts bets only by telephone.

This agreement comes just a few days after Paddy Power gave up on financial markets, ending its agreement with Capital Spreads. Traditional bookies are not quite well driving sports punters and gamblers to spread betting. Let’s see if Fitzdares can do better with its high rollers user base.

24 Mar 2011

European equities are currently pointed lower as the small relief rally during the Asian session ended when the city of Fukushima experienced several earthquake aftershocks, creating obstacles for production rebuilding operations. The FTSE 100 futures have dropped 0.6 percent on the news release.

Today, traders will be paying attention to the Bank of England Minutes from its last policy meeting, which will give some insight into the Bank’s opinion for future interest rate decisions. These have taken on a higher level of importance after yesterday’s consumer price index rose higher than anticipated on a yearly basis. Inflation at these levels makes the situation difficult for the BoE and they may have no choice at this point but to increase interest rates. Other headlines out of the U.K. will focus on the Chancellor of the Exchequer’s budget statement to parliament.

The Japanese government released a statement this morning, attempting to assess the extent of the damage costs from the earthquake. These figures came in much higher than other recent forecasts, at the equivalent of 310 billion U.S. Dollars, which is equal to nearly 5% of real gross domestic product.

In North American earnings data, Walgreen’s stock dropped 6.6 percent after the company’s second quarter earnings report came in lower than analysts were expecting and showed a weak gross margin. But even with major surprises like this in real earnings data, earnings season in general is not keeping the attention of the market at the moment. We coming into a new earnings season shortly but global news events will need to see some sort of resolution before the bias can be directed away from the headlines. But this, of course, must happen at some stage and all of this fundamental data will need to be looked at again when this is the case.

Corporate earnings are slowing starting to trickle in now. Today, Inditex, the Spanish clothing retailer, produced its yearly net income of 1.73 billion Euros against expectations of 1.70 billion Euros. Inditex has plans to open 500 new stores this year, and this is another factor pushing up its share prices. Out of Italy, UniCredit released its net income for the fourth quarter, showing 321 million Euros in revenue against expectations of 209 million Euros, which was a massive upside surprise. This is a small preview of the raft of earnings data that is scheduled for the coming weeks.

Technicals:

The AUD/JPY has seen significant volatility recently, dropping to support far below at 74.50 before bouncing to highs of 82 before stalling. It is no surprise that prices are having a hard time gaining any traction here, as this was the major support level for the majority of this year. Looking at the longer term charts, we need to see a weekly close below the 73 area before we can turn bearish. Daily indicators are looking like they are trying to roll over from mid levels.

Oil is breaking its hourly resistance levels above 103.60 on its way back to the yearly highs. There is little in the way of significant resistance at this point but getting into new buy positions at this stage is risky without tight stops. Support has moved up to 101.40 and resistance is just ahead at 107. A break to the upside strengthens the bullish bias and calls for much higher levels for the longer term.

23 Mar 2011

The CPI report from the U.K. rose much faster than the consensus forecast for the month of February reaching the fastest pace in over two years. According to the report, consumer prices increased by 4.4 percent from the previous year for the month of January. The upside surprise in consumer inflation will create pressure for the Bank of England to raise interest rates from the currently accommodative levels. The current inflation increase is the highest since the end of 2008. Consensus estimates called for a rise of 4.2 percent.

During the last monetary policy meeting for the BoE, 3 of the 9 voting members suggested rate hikes are necessary. The target rate in England for inflation is 2%, so the current report more than doubles this and creates problems for the integrity of monetary policy.

England is currently making efforts to decrease its federal budget, and global news events are complicating profit scenarios for private companies, so the argument can be made that the BoE is behind the curve in its ability to control price stability. Global factors are clearly creating a factor of unpredictability, so it would not be surprising to see further surprises in government data out of the U.K. in the coming months.

Traders will base investment decisions on whether or not the BoE meets market expectations: Raise rates, or release statements that say we will “wait and see.” The British Pound rose 0.2 percent against the Dollar after the CPI was released during the London session. The GBP reached $1.6360, up 0.3% on the day.

Out of Europe, the ECB released a statement indicating that the economic uncertainty created by the Japanese and Middle East situations “might” not be enough to change their opinions on interest rates going forward. Two ECB members released statements yesterday saying that “strong vigilance” is necessary to maintain price stability, which essentially suggest that a rate hike in the EU is imminent.

The Euro rose above 1.42 against the Dollar for the first time since the end of last year and government bonds dropped on the argument that the European Central Bank will raise lending costs. Inflation in the Euro region (17 countries) rose to 2.4 percent for February ahead of the ECB’s 2% target since December.

Technicals:

EUR/USD is lagging the GBP/USD in typically conservative fashion. The Pound has broken historical resistance at 1.63 but the Euro is stalling at historical and long term resistance at 1.4280. Which is the leader and which is the laggard? The higher lows and higher highs are suggestive of Dollar weakness. Breaks at immediate levels are suggestive of new longer term trends. The AUD/USD is rallying again, pressing against all time highs. Resistance to the topside is solid overhead at 1.0180, with support moving up to 0.97.

Commodities are flattening out at elevated levels. Gold is pressuring all time highs once again (1430) at time of writing. We have nothing to suggest that prices will be dropping any time soon, as prices bounced off of the 38% Fib retracement of the move from 1306. This level is not key support going forward, coming in at 1390.

22 Mar 2011

European equities are unchanged to open trading on Tuesday as the market’s recent attempt to post a rally has little in the way of data to rationalize a continued bull run. We did see an increase in overall risk sentiment as Japan has seemingly managed to avoid a nuclear meltdown but markets will now be forced to turn the attention back to the fundamental data in order to make accurate valuations.

The FTSE 100 index is following its lead from Europe and is trading flat prior to the open. In macro data, today’s session will be guided by the U.K. consumer price index from February, released at 9:30 GMT. This report is expected to print a reading of +4.2% from the previous year. This number shows elevated levels on a historical basis and creates evidence for heightened inflationary pressures in the U.K. if the consensus expectation proves to be correct.

Barring any major surprises, the main issue going forward will be for how long the Bank of England will be able to leave the benchmark interest rate at such low levels (currently at 0.5 percent). As an additional source of guidance, investors will be watching the Bank of England Minutes which will be released tomorrow.

Currently, the downward pressure in stock markets is having a brief respite as the situation in Japan seems to be under control, softening the impact of one of the “black swans” that investors are being forced to assess.

The other, however, has only escalated in severity as tensions in Middle East continue to present surprises to market participants. Crude oil prices remain well above historical averages and are now beginning to consolidate at higher levels (above the psychological 100$ figure). At these levels, profit margins for private companies are already coming under pressure, and this will likely erode that progress that was made during the last corporate earnings season.

If we add this to the fact that the conflicts in the Middle East still have not resolved themselves, we can see large variations in the ways will be able to perform for the rest of next year. Wherever the oil price is during the next earnings season, the negative effects of this period will have to be factored into the equation and this will continue until Middle Eastern government can make some sort of agreement with their discontented opposition.

Overall, macro data is still suggesting that the global economy is managing to show expansion but the effects of recent events have not had enough time to factor into the national data reports.

Technicals:

The EUR/USD has risen to its weekly downtrend line, from the highs above 1.60. A break and close above here would be a significant bull trigger, signaling that the long term downtrend has completed. The current bull wave has produced higher highs and lows, so we only have historical resistance at 1.4280 in the way. Initial support comes in at 1.4040 and a break here would alleviate the pressure to the upside.

Crude oil is currently caught within a consolidation pattern on the hourly charts, which is suggestive of an increase in volatility going forward one the current range breaks. Right now, resistance is seen at 103.40 while support has moved up to 101.80. The downside, however, could be limited to the psychological 100 level. A break here would call for a larger retracement, with 96.70 as the first downside target.

21 Mar 2011

Oil production in Libya dropped to below 400,000 barrels per day after foreign energy corporations advised their employees to evacuate the region, according to the chairmen of National Oil, which is the country’s state-run energy company.

He went on to say that Libya had no intention of ending its contracts with foreign energy companies and that he hopes the evacuated employees will return soon. He also argued that if this does not occur in the next few weeks, the risk exists that oil production in Libya could come to a complete stop.

These comments come at a time when military aircraft has been deployed from the U.S., U.K., Canada, France and Italy to initiate attacks on the Libyan air force and other targets. The aim of these attacks is to create a “no-fly” zone over the country, which was authorized previously by the United Nations.

Previously, Muammar Qaddafi had announced a cease fire proposition but this statement was taken back after news of the airstrikes. Qaddafi then ordered his military to attack rebel troops based in Benghazi.

Major oil centers in the country, including Ras Lanuf (the largest production area in the country), have been damaged during the conflicts between Qaddafi’s army and rebel troops after wide-scale protests calling for Qaddafi’s removal began during the middle part of February.

To gain some perspective of the ways the conflict has affected oil production from Africa’s third-largest oil producer, overall totals dropped by nearly 200,000 barrels to 1.4 million barrels for the month of February. 1.6 million barrels were produced during the month of January and fighting in Libya did not even start until February 17th. Total production for the month of March will be particularly interesting, as the operations in many companies have slowed down to a near halt.

Oil prices did see some selling yesterday after the Libyan government said it would be willing to stop military attacks and enter into negotiations with the rebel factions.

The April contract Crude oil slid 35 cents to $101 a barrel before reaching highs above $103 earlier in the week. We remain at elevated levels on a historical basis, as prices have risen more than 10% this quarter. Turmoil in multiple countries in the Middle East has been the main catalyst for this, as we have seen regime changes in both Tunisia and Egypt.

Technicals:

GBP/JPY has seen a great deal of volatility in the past few weeks (along with most Yen pairs) and the major consolidation that we have been seeing since the end of 2009 has finally broken from its consolidative ranges. On the daily charts the moves look significant because we did see closes below critical support levels, but this is not matched by the weekly charts, so we should be cautious of a false break and an incorrectly bearish bias. Major long term support is at 118.20, and we need to see a close below this in a monthly basis before we can truly turn bearish on this pair.

The oil prices is easing back some after finding support at the 50% Fibonacci level of the move from 85$, which remains at 96.20$. 103.80$ is now the resistance level to the topside while support below comes at the historical and psychological level of 100$. A break of support turns the bias to neutral, only a break of critical support at 93.40$ will accelerate gains to the downside. Daily indicators are flattening out at mid levels.

Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. Capital Spreads is a trading name of London Capital Group Ltd (LCG). capitalspreads.com

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